Icahn Comments On Warning Letter Just Sent By FDA To Forest

On August 1, 2012, Forest received a warning letter from the
FDA, regarding a violation of Daliresp promotional practices by its
sales reps. This warning letter follows another warning letter from
the FDA in April 2011 regarding unethical sales practices by a
Forest sales rep concerning Savella. Importantly, both of these
letters were issued AFTER Forest's settlement with the US
Department of Justice in September 2010 regarding similar unethical
sales practices pursuant to which Forest pled guilty to a felony
charge, paid over $300 million in fines and signed a 5-year
Corporate Integrity Agreement to resolve these matters.

It is obviously worrisome that these practices would be ongoing
at Forest given its chequered history in similar matters. In fact,
Forest has received 2 of the last 43, or about 5%, of all warning
letters of this type issued by the FDA in the last 18 months
despite thousands of products being promoted by hundreds of
companies. And more importantly, Forest is one of the only
companies lax enough to receive multiple warning letters while
subject to a Corporate Integrity Agreement. Moreover, it is
alarming that the FDA specifically states in the warning letter
that it is concerned given the pre-existing requirements under the
Corporate Integrity Agreement. It should be noted that Forest
previously disclosed that "failure to comply with the terms of the
Corporate Integrity Agreement could result in substantial penalties
and potential exclusion from government health care programs" and
this is a potential breach of Forest's obligations under that
agreement.

And why wouldn't Forest disclose this to shareholders in the
10-Q it filed on Friday, August 10, 2012. I am sure they will say
that they were advised that they could get away without disclosure.
But that is neither the right answer for shareholders nor the right
message to the management. In fact, I believe that Forest has been
very aggressive in its lack of disclosure with the SEC – many
of their major license agreements are not publicly filed with the
SEC even though all material agreements are required to be filed
with the SEC and they have been opaque on their succession plans,
to name just a few deficiencies.

This is yet another example of the stark lack of corporate
governance at Forest where an ineffective Board made up largely of
non-independent directors is unwilling or unable to hold Howard
Solomon and his management team accountable. From personal
experience I can tell you that Dan Ninivaggi has great experience
in the area of corporate governance and management accountability
and he would not be a wallflower on this Board. Additionally,
Pierre Legault has a strong operational background in employee
supervision and human resources, an area that appears to be lacking
at Forest. We need to add strong independent directors, like Dan
Ninivaggi and Pierre Legault, my two nominees recommended by ISS,
as well as my other nominees, to instill much needed corporate
governance and independence on the Board and bring this great
company back to the shareholders.

ON JULY 23, 2012, THE PARTICIPANTS (AS DEFINED BELOW) FILED A
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